IRS Simplifies ESOP Section 1042 Filings

In temporary regulations issued July 9 (EE-96-85), the IRS has made it easier to comply with filing requirements under Section 1042 of the Code. That section allows certain sellers to qualified ESOPs to defer capital gains taxes on the sale by reinvesting in qualified replacement property (QRP). Under prior rules, sellers had to have statement of purchase notarized for the QRP within 30 days of purchase. Now they can have the statement notarized any time up to the filing of their tax return for the return following a qualifying purchase.